E58: November's CPI, preparing for a downturn, macro outlook, Better.com's botched layoffs

if you all of a sudden, you know, push up the upper bound on what a conforming mortgage is to a million dollars, that effectively means, and it's roughly about 20 percent, that effectively means that you're moving people's net worth up by about four or five percent. ... they spend it or they invest it, or they, you know, it could be a real disaster scenario in five or six years. By the way, no, no, this is more like 1929 kind of thing.

They have record cases right now, but deaths and they're also done great with the vaccine

there could be this thing happening where Omicron is the you know, the the air bomb that gets dropped, clears the room and then it's all over

And then the fourth is you have all these boomers with an enormous amount of savings, 30, 40, 50 trillion dollars, who are pulling forward their retirement and also subsidizing their kids. You put it all together, there's less of an incentive to be in the job force unless you pay higher wages.

you also have the supply component, which is we don't have enough goods and services. Why? Because we've been, you know, passing out these STEMI checks that disincentivize people from working.

I'm seeing the salaries going up faster than inflation, people are raising people's salaries, you know, in double digits to try to get them to come to these jobs.

He took SoftBank money. SoftBank, as you guys, as we all know, creates a very strong incentive and capitalizes businesses to go after kind of ultra, perhaps unnatural growth. ... the loss of jobs is the cost of capital with these ultra high growth incentives that are kind of being structurally built into the fundraising rounds in these later stage deals lately.

The root cause of why this is here, as far as I can tell, is not a company that doesn't have consumer demand. It's a company that may have been mismanaged for growth to meet the consumer demand because of too much money. ... maybe we overgrew because we were drunk on free money. And now we have to realize that we actually have too much capacity for the demand that actually exists.

listen, we may be going into a very different environment, and I think the company is worth the valuation we got, but if you just look at the public comps, valuations are down 30%, 40%. ... So if we were to take more money into the round at the same valuation, that's kind of a good deal for the company, and it gives us more runway, gives us more insurance.

And here's another thing is the Fed is now saying that they're projecting two to three rate increases next year. So let's call that 75 basis points, multiply that by the close to 30 trillion of government debt

So the low-cost model of consumerism in the United States, which has been a stronghold for our economy for 100 years at this point, may be coming to an end, or it will accelerate the implementation of automation across that sector of the economy.

And this is where Bitcoin feels to a lot of people like a great equalizer. And yeah, I'm not a huge, I'm not a Bitcoin maximalist or anything. But I think that's where the appeal arises

We had the price sales ratio of Zoom, in other words, the value of the enterprise versus their actual sales was at 123 It's now at 14.7. Peloton was another one of those at 23, now down to 3x, down 87%. ... it seems like there was a mispricing of certain equities

all of a sudden inflation changes and the front end of the yield curve goes, and all of a sudden all these assets, when yields go up, prices go down ... That's called de-grossing. ... And we've been going through a very painful process of this de-grossing. Hedge funds are doing it in droves.

You went from that environment to all of a sudden an environment of now we're expecting to have rate increases, and that's going to suck the liquidity out of the system.

Now, the problem is if you then raise rates and you can't borrow that money, and suddenly people have to start to pay that debt down without economic growth having occurred, the whole system goes bankrupt. So the challenge that the Fed has is how do we raise rates without triggering an economic recession?

It is a breaking of the bank. They're talking about minting trillion dollar coins. ... So you're looking at 150 billion of incremental debt service costs, right? So multiply that over 10 years, that's 1.5 trillion over 10 years. That's your build back better right there.

I want to remind you about the deflationary effect of technology, and it is really being felt in the economy.

the purchasing power that arises when the inflation is higher than what those things are going up at indicates economic recession underlying that inflationary bubble ... have we pumped enough money into trigger economic growth that we can come to balance where the growth can outpace the inflation? And we're not there.

I actually think there's a lot of strength in the economy right now. It's not all negative. ... I actually think there'd be a massive relief rally, and the economy would take off like a rocket next year. ... And we could let things have more of a soft landing, as opposed to the sudden austerity, which is whipsawing the economy.

BuzzFeed IPO was a complete disaster. 80% of people are already in their spack. BuzzFeed is circling the drain.

We just loaded the, we put the bullet in the chamber and loaded it from Manchin. This bill is not going to happen, David, with the $3 trillion deficit increase.

I hope not. I mean, but the point is that, look, if people like us don't speak up and say, this is a reckless, foolish, crazy. Pump the brakes. Yes, exactly. Then it could happen.

it's definitely not transitory ... Then it went to 6.2. Now it's 6.8. Looks like it's headed to 7%. ... these guys are continuing to pump more and more stimulus into an economy that has enough

CPI is horribly calculated and it's really imprecise ... the largest owners of nationwide single-family rentals are reporting a 17% year-over-year rent increase ... it means that core CPI actually went from 4.9% today to actually 9%. And the CPI print, which was 6.8%, was actually 10.1%.

We're seeing asset bubbles everywhere in NFTs, in crypto, in startups, in new startups, in new ideas. ... And as a result, we're kind of seeing this inflationary pressure persist.

That thing has been a stone sinking to the floor of the ocean.

We're not dispensing stock advice, but I'm not selling any of my shares. I'm telling you right now.

over the last 15 or 20 years, what was once a question is now definitive, which is that the things that are valuable tend to be technological, because they're super high margin, they grow really quickly, they compound, they create enormous cash flows at scale.